ALL Elected Officials Should Go to the San Diego County Taxpayers Association Pension Certification Program!

Wow! What a great Pension & OPEB & Labor Negotiations Program!  From the why, to the details, to the how! Confirmed many things that I have been shouting all along as a Board Member at Helix Water District...but being the silent minority, sometimes you just are not heard. Hopefully, after November 2016, there will be change and perhaps the Board will be able to get the Helix Water District General Manager to look at our $54 MILLION Dollar UNFUNDED Liability SERIOUSLY!
Here are my notes on the program.

August 18 – 8am-5pm; San Diego County Taxpayers Association – Pension Certification Program (expense/per diem). GREAT Program, highly recommend for all elected officials and people involved with overseeing the Financial/Pension/OPEB/Labor Negotiation Programs.

• SIDE NOTE: Helix Water District according to our Actuarial for June 2014 has an Unfunded Liability of $30 Million for our Retirement Pension and our Actuarial for June 2015 Unfunded Liability of $24 Million for our Other Post Employment Benefits (Post Retirement Health Care Benefits).

• Creating and Managing Public Value: Presentation from Haney Hong, President & CEO of Taxpayers Association regarding
  • Because public employee retirement programs create a public financial obligation, officials who propose and oversee/manage such programs have an ethical obligation to ensure their legitimacy and effective and efficient use.
  • Legitimate – Process Philosophy
  • A public financial obligation means that a citizen is obligated to give up property in the form of taxes (rates). But it isn’t enough to just be obligated; you want citizens to feel that they out to relinquish property for a good reason.
  • Process should be public and account for varying viewpoints, employees and public consideration.
• Public Pensions 101: April Boling, City of San Diego Citizens Pension Reform Committee – Board and Public Understanding Perspective…
  • Explanation of defined benefits and pensions explained, Normal Cost (New Charges), Unfunded Actuarial Accrued Liability (UAAL, Previous Unpaid Balance), Interest on the UAAL (Interest on Unpaid Balance, when returns are low, need to replace the 7.5% Expected Rate of Return) Bottom Line the Tax Payers pay for any shortfall.
  • Annual Required Contribution Formula is the Normal Cost and Payment on the Unfunded Actuarial Accrued Liability.
  • What are the causes/sources of unfunded liabilities?
    • Experience Investment Losses
    • Actuarial Experience
    • Past service benefits (some retroactive benefits)
    • Failure to make required contributions (when superfunded, payments were not required and some agencies did not pay their regular payments).
    • Negative Amortization! CalPERS does this!!!
  • Smoothing is when the Market Value of Assets is greater or less than assumed and they defer gains and losses over time. Most agencies smooth over a period of 4 years, CalPERS does this over 19 YEARS!
• Actuarial Aspects of Public Plans: Bill Sheffler, Actuarial, Executive VP of SMI Pensions – worked with the City of San Diego Pension Reform Committee.
  • Questions to ask about the valuation report was discussed:
  • If we continue to fund as we did last year when will our funding ration hit 100%?
  • Are there any operational changes that would improve the plan’s security, or efficiency?
  • Are there any concerns about data quality?
  • Perform a Stress Tess – a future projection of the plan’s financial condition which assumes that the expected results are not obtained – assume a 1% more or less and see how that affects years after.
  • What is the impact of employee turnover on pension payments? Increased turnover reduces plan costs in general.
• Negotiatng Pension & Retiree Benefits: Timothy L. Davis, Labor & Employment Law Negotiator.
  • Basic Scope of Bargaining
  • Negotiations should ALWAYS be in WRITING! (Hdndt)
  • All Negotiations should include cost impact! (Hdndt)
  • Any rejected proposals can be disclosed to public, just cannot disclose the debate.
  • Retirement Pensions – are Constitutional Contract Clause – Cannot take it away, given at time of employee is hired.
  • OPEB – Health Care Benefits – is an employment benefit, not a pension benefit!
  • OPEB vests upon retirement, terms set at time of retirement
  • Can change OPEB any time before they retire.
  • Always negotiate in good faith!